United Energy, a Hong Kong-listed oil and gas firm controlled by mainland tycoon Zhang Hongwei, plans to plough up to US$3 billion into wind and solar power projects in Pakistan in the long term.

The firm, which bought US$750 million worth of oil and gas assets in the country from international energy major BP last year to help fund compensation for BP's 2010 oil spill in the Gulf of Mexico, had won approval from the Pakistani government to build 500 megawatts of wind farms, Zhang told reporters after its annual shareholders' meeting yesterday.

Zhang, United's chairman, ranked the mainland's 80th richest person last year with a personal fortune of 12 billion yuan (HK$14.6 billion), said it was also seeking to buy oil and gas assets in North and South America, Africa and the Middle East. He has a 72 per cent stake in the firm.

'United will consider issuing new shares and convertible bonds to fund projects and potential acquisitions,' he said. 'Besides, we have access to a US$5 billion credit facility from China Development Bank, of which we have used only US$640 million.'

Of the 500MW of wind farms it plans to build near its Pakistani oilfields, United has got land use rights for 150MW, with the remainder expected within three months. Zhang said the firm was talking with mainland wind power equipment producers on potential procurement.

According to Bloomberg New Energy Finance data, the cost of wind power generators procured in last year's second half for delivery next year averaged US$1.2 million per MW in the international market. Including civil works and installation, each MW of development typically costs US$2 million, according to British government data, meaning a 500MW wind farm may cost US$1 billion.

Although political instability and terrorist activities have deterred would-be investors in the energy sector, Zhang said Karachi offered attractive terms to foreign investors, including a guaranteed return on wind farm projects of 17 per cent through subsidised power prices.

However, United had only signed a memorandum of understanding to co-invest in the projects, not an investment agreement.

Zhang said Pak-China Investment - an equal joint venture between China Development Bank and the Pakistan government set up in 2007 - had indicated an interest in taking a 5 per cent to 15 per cent stake.